Switching to a chapter 7

[mrobinette]

I trusted my attorney and now realize maybe his laid back nature wasn't the best idea. When we filed we made barely above the median limit for Ohio. We were behind on our mortgage and car and they said both would be lost in a chapter 7- again I trusted my attorney. We now make 20,000 above the median limit, so I am assuming we are unable to switch with thew amount of money.
We are only a little over a year into the plan. The car is only worth about 2000, but my payoff is 5000. I want to get rid of the car because it has 175000 miles on it and many things are starting to go wrong. So, no I am not able to keep it for 4 more years.
What would we lose in a chapter 7? Can we even switch with leaking more than they median limit?

[LadyInTheRed]

Your attorney was correct that if you had filed a 7 without catching up on your mortgage and car payments, you would have risked losing your house and car. A Chapter 13 allows you to keep all of your assets and catch up on arrears. A 7 may have been an option when you filed if you were willing to give up the car and home.

To convert to a 7, you would have to qualify for a 7 on the conversion date. Being $20,000 over median is an indication that qualifying for a Chap 7 would be unlikely. You could try running the means test calculator to see if you pass: http://www.legalconsumer.com/bankruptcy/nolo/ The best way to know for sure is to have your attorney run the numbers. If you are able to convert and your mortgage arrears is not caught up, you would again be at risk of losing your house and your car, but it sounds like you don't care about losing the car. Your house would also be at risk if you have any equity in it.

[mrobinette]

We haven't been in it long enough to have paid off the arrears unfortunately.

[shark66]

We haven't been in it long enough to have paid off the arrears unfortunately.

If the mortgage arrears haven't been paid off in full, and you convert to 7, you'll effectively be surrendering the house. Is that something you'd want to do, or not?

Good luck to us all.

[SMinGA2]

Some other thoughts... Dismissing the ch. 13 and qualifying for a new (or used) car loan will be tough. Been there, tried that, didn't work out so well for me!! I had to drive beaters (and waste a lot of cash that I didn't really have to waste) for just over a year before I could get sub-sub-sub-par financing.

You may have a better chance at getting financing now (with the trustee's permission to incur new debt) while in the chapter 13. Perhaps discuss with your attorney the possibility of surrendering the car you have and buying something else.